The cost of living adjustment (COLA) will be the maximum 2.0% beginning February 1, 2022.
The COLA is equal to half of HMEPS’ net five-year investment return minus 5%, but not less than 0% nor more than 2%. The net five-year investment return on HMEPS’ investments as of the end of fiscal year 2021 is 12.39%, and half of the difference between the five-year investment return minus 5% is 3.7%, which is more than the maximum of 2.0%. Therefore, the COLA is 2.0%.
The COLA, not compounded, is applied to pension benefits for all group A retirees and group B retirees, and for all group D retirees who terminate employment on or after July 1, 2017 with at least five years of credited service, and survivor benefits for eligible survivors of a former member of group A or group B, or of a former member of group D who terminated employment on or after July 1, 2017 with at least five years of credited service, if such eligible person is receiving a pension or survivor benefit as of January 1 of the year in which the increase is made. For DROP, the COLA, not compounded, is applied only to the DROP account of an active DROP participant who is at least 62 years of age as of January 1 of the year in which the increase is made.